Asian
stocks were mostly depressed during early trading thanks to risk aversion, and
this caution could trickle down into the European markets. With Wall Street
pummelled by rising fears of U.S protectionism on Wednesday, U.S stocks are at
risk of extending losses this afternoon if the negative sentiment prevails.
Risk aversion could become a dominant market theme moving forward, as concerns intensify
over escalating trade tensions negatively impacting global growth.
Sterling
supported by Dollar weakness…
The
story around Sterling’s appreciation this week continues to revolve around a
weakening U.S Dollar. With investor appetite for the British Pound limited amid
Brexit uncertainty, bulls are finding it increasingly difficult to keep prices
buoyed. While Dollar weakness has the ability to support the GBPUSD in the near
term, price action suggests some fatigue is already starting to take place, with
bears lingering in the vicinity.
Taking
a look at the technical picture, Sterling’s appreciation has been halted on two
occasions this week by the stubborn gatekeeper known as 1.4000. Sustained weakness below this resistance
level could invite a decline back towards 1.3850. Alternatively, a breakout
above 1.4000 could trigger an incline towards 1.4050 and 1.4120, respectively.
Commodity
spotlight – WTI Oil
WTI
Crude held steady on Thursday morning, after the Energy Information
Administration (EIA) reported on Wednesday that gasoline supply dropped thanks
to demand jumping to a seven-month high.
While
recent reports of rising demand could offer the oil price some support in the
short term, soaring production from U.S Shale is likely to present many
headwinds down the road. With OPEC warning that Trump’s trade policies could
negatively impact oil demand, the outlook for WTI Crude remains tilted to the
downside. The unsavoury combination of surging U.S Shale oil production and the
threat of demand softening amid a potential trade war could spell trouble for
OPEC.
From a
technical standpoint, WTI Crude remains under pressure on the daily charts
below $62.00. Repeated weakness below the $62.00 resistance level could open a
path back towards $60.00.
Bitcoin sinks
below $8,000
Bitcoin
simply failed to shield itself against an onslaught of negativity during
Wednesday’s trading session, with prices eventually sinking below $8,000 on
Thursday morning.
In a
move that eroded investor appetite towards Bitcoin, Google announced that it
will ban online advertisements promoting cryptocurrencies. The downside was
fuelled by the International Monetary Fund who called for a global crackdown on
cryptocurrencies. With members of Congress delivering the knockout blow on
Wednesday amid scepticism around digital currency, the outlook for Bitcoin is
looking increasingly gloomy.
Focusing
purely on the technical picture, Bitcoin is bearish on the daily charts with
$10,000 acting a solid psychological resistance level. Sustained weakness below
$8,000 could open a path back towards $7,000 and $6,000, respectively.
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